Fear and Loathing on the Marketing Trail, 2014

Investment advisors and investors now unanimously believe markets are driven by central bank manipulation and that current price levels will collapse. Yet they're more fully invested than ever. They understand the game perfectly. They're just no longer willing to participate in it with genuine conviction. A chasm has opened between what professionals know intellectually and what they're willing to act on emotionally.

• Trading volumes in equities have collapsed to levels four standard deviations below a 50-year trend. This isn't a seasonal dip or a cyclical trough. The 50-year bull market in market activity itself ended in 2008, and the decline has accelerated since.

• Advisors and investors describe the entire endeavor as a charade. They're aware central bankers and political leaders are using narratives to manipulate price levels, and they're cynical about the lack of authenticity. But knowing you're being played doesn't make the game less exhausting.

• The paradox is that confidence in markets has never been higher while faith in them has never been lower. Professionals are confident in their ability to play the game. They're just not confident that the game has any connection to reality. Confidence is knowledge. Faith is belief. Only faith moves people to act.

• The absence of animal spirits isn't from fear or greed dying out. It's from narrative crowding-out, where constant public messaging from authorities about market manipulation drowns out the private stories and emotions that would normally drive buying and selling decisions.

• Private markets still inspire genuine belief and action. The farther an investment opportunity sits from public market game-playing and the closer it is to real economic activity, the more it compels conviction. This creates an existential threat to firms that depend on public market trading volumes.